As my wedding date approaches, there are an ever-increasing number of things to worry about and keep track of. While I’ve let my fiance take control of most of the wedding plans, the things I’ve spent my time thinking about take place long after we get back home from the honeymoon. Mainly, should we keep our money separate, or should we combine our finances after getting married?
Most people I talk to seem to be on one end of the spectrum or the other. They either say you should keep everything separate and in your own names, or they say you should combine everything and think of yourselves as one financial entity.
With money being a topic that causes so many arguments and so much stress on relationships, this isn’t a decision to take lightly.
We’ve been together for several years now and money has never been a big focus in our relationship. We both handle our finances extremely well and have done pretty well for ourselves individually. She doesn’t rack up huge credit card bills at the mall (despite a definite shoe fetish) and I don’t have mounds of student loans that we need to dig out from.
We actually have very similar views financially. From the start of our relationship there was never a discussion or any tension over who would pick up the bill at the restaurant or who would pay for the movie this time. We seemed to work out a natural balance without even trying and have been rolling along ever since. I think the place we differ the most is in our risk tolerance. She tends to be quite conservative, treating each dollar as something important, not to be parted with lightly. I, on the other hand, tend to be more of a risk taker. I don’t get emotional over the highs and lows that come with investing. Money is just a tool to be used in my mind. I guess this comes from my history as a poker player. After a while you get used to the ups and downs of the game and focus only on making the best possible decisions, much like we all should do with the markets. (Related: How Poker Made Me A Better Investor)
Perceived Problems When Combining Finances
- Different Goals – At the heart of our differing risk profiles are different long-term goals. She enjoys the corporate life, and is quite content to work the next 30 or so years and retire at the typical retirement age. I would prefer to leave the corporate world behind ASAP and look to focus on investing aggressively and creating multiple income streams. If we were to combine finances we would have to reconcile some of these different outlooks.
- Unequal Incomes – I doubt any couple makes the same amount of money, and we are no exception. With the disparity in our incomes it may feel like one person is more “along for the ride” than the other. Especially with major purchases and long-term goals, with one pool of money there’s no real way to fairly split these things proportionately based on income.
- Holidays – Albeit a minor problem, buying each other gifts out of a joint pool of money just doesn’t seem like it’s much fun. The element of surprise would be lost!
- Too Many Accounts – We each have a checking, savings, and several investment accounts. Going through the process of opening and closing accounts, transferring money, changing direct deposit & auto-pay’s seems like a huge pain in the ass. Our systems have worked for this long, why change them? If it ain’t broke, don’t fix it. Right?
A Trial Run
We haven’t made any decisions on when, how or if we’re going to combine our finances. But what we are doing is giving things a sort of trial run. This year we’re living off of one single, combined budget leading up to our wedding. This will give us a taste of treating our finances as one while still retaining the autonomy of our own bank accounts.
The same goes for our investments. She’s been gracious enough to give me (most) of the control over the investment strategy and decisions. So I imported all of our investment accounts into Personal Capital which makes it infinitely easier to view our nine (NINE!) investment accounts as a single entity. It would take me an hour to figure out our asset allocation and review our holdings by hand. Now I can develop and implement a singular strategy without much work at all. (Related: Personal Capital – The Best Way To Manage Your Investments)
Obviously the best way to work out these issues is to talk to your partner about them. We’ve discussed things in passing but simply haven’t had the time to talk about them at length. In the end I’m sure we’ll end up with some sort of hybrid system where we combine the majority of our finances but leave ourselves a personal account of some kind.
Combining your finances into a single unit, or keeping everything separated can both work for your relationship. The key is to have the discussion with your partner and find out which approach suits your personalities and goals the best.
Readers: What approach do you take to the finances in your relationship? Have you gone from combined finances to separate finances or vice versa? What are the pros and cons you’ve experienced with your chosen style of money management?